India’s profits from crude oil refining are good for exports. Russia’s exports of crude to India are creating huge amounts of surplus rupees in banks. India’s exports of refined oil products generate hard currencies in EU and USA. Russia’s imports from India lag crude oil exports. India’s demand for refined oil fuels and chemicals is rising with good prices on Russian crude oil. Russian politicians have made conflicting statements about Indian sales of crude.
EkaLore has previously written about Russian crude oil imports into India. Russian imports were tiny in January 2022 and are now more than 34% of Indian imports. Russia crude oil imports have peaked at over 50% of monthly Indian imports. In 2022 India imported ~11% of edible oils from Russia as well. India replaced a large portion of Middle-eastern sourced crude oil with Russian after February 2022. India is now the #3 importer of crude oil in the world after the USA and China. Indian exports of refined oil products provide gross refining margins of USD$8-USD$10 per barrel of crude oil.
Reliance Industries, Indian Oil Corp, Bharat Petroleum, and Hindustan Petroleum (HPCL) were major purchasers of USA crude oil (at different grades). Reliance, once a large buyer of Venezuelan crude oil, shifted to USA crude oil after Venezuela was sanctioned. Reliance was a large importer of USA heavy-crude for 27% of Indian oil imports of heavy crude. Reliance’s refineries were designed and built to profitably handle heavy crude. The other Indian importers prefer light (“sweet”) crudes, using 67% of Indian oil imports, with 6% making up the balance in medium crude. Multiple refined export products are produced in India including fuels (diesel, heating oil, etc.), condensate (VGO), and chemical feedstocks. Indian produced vacuum gasoil (VGO) make up to 65-80% of exported refined petroleum products to the USA market. The refined products are easily sold on global markets as feedstock for fuels and chemicals.
Reliance has now become a large buyer of Russian crude and benefited from the special tax status at its refining complex. Nayara Energy and Reliance have previously accounted for more than 75% of Indian refined exports. Much of the exported refined products goes back to the Middle-east for blending. Much of this product is used domestically with local production ultimately supplied to European markets in an offset. Indian enterprises are strongly benefiting from this trade.
The trade advantages favor India in the current situation with Russian commercial options limited by a combination of monetary and financial factors. In our next release EkaLore will look at some of the details.
For more analysis and notes on a Dynamic India see http://www.ekalore.com/india-business
For a detailed look at how these situations can work for your enterprise contact EkaLore at http://www.ekalore.com
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